- USD/JPY is attempting a bounce, finding support from firmer US Treasury yields.
- The pair struggles to resist above 124.00 amid a pullback in the US dollar.
- All eyes remain on the Fed minutes, which could highlight the divergence in monetary policy between the Fed and the BoJ.
The pair USD/JPY is rallying towards the 124.00 levelas the continued rise in US Treasury yields helps the pair find support near 123.60.
In the last hours, the US dollar has recorded a sharp decline from multi-month highs of 99.75 when measured by the DXY dollar index. This could be attributed to some profit-taking ahead of the release of the March FOMC meeting minutes.
However, US Treasury yields continue to rallyas Fed officials stepped up aggressive rhetoric recently, calling for a higher rate hike as well as a balance sheet reduction at the May meeting.
In the meantime, New Western Sanctions Against Alleged Russian War Crimes in Ukraine and Aggressive Fed Expectations are weighing on market sentiment, which may make the dollar pullback short-lived.
On the other hand, the Bank of Japan (BoJ) remains stuck with its ultra-loose monetary policy stance while desperately defending its 0.25% yield curve target. This BoJ action has widened the monetary policy divergence between the Fed and the Japanese central bankleaving the yen in the hands of bears.
USD/JPY technical levels
Source: Fx Street
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